By Nik Sharma
Today, I’m writing this newsletter in Austin, coming from Miami early this morning. American Airlines might be one of the worst big airlines. JetBlue and Delta are where it’s at. I’ll leave explaining the reasons why to The Wolf!
Anyways, I hope you’ve had a relaxing weekend. If you don’t already have a beverage in your hand, and you haven’t already kicked your feet up, well then it’s time to get comfy.
It’s crazy to think it’s been over a year writing this newsletter. Thank you to everyone who consistently reads these emails, and also to those who’ve trickled in over the last year. Everything with this newsletter has been organically grown. You all are my extended family!
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This past Friday and Saturday I was at a marketing event called Geekout in Miami where I was on a panel solely for Q&A. One of the questions was, “When is the right time to bring marketing teams in-house?” That’s what today’s newsletter is going to be about. This is all from my personal experience, so please reply with your differences too.
When I joined Hint Water, we were spending just barely over 6-figures in digital ad spend. The agency, based in New York, was a performance marketing agency (aka they specialized in solely media buying at the lower funnel), and they’d take 10% of the media they spent. Obviously, they had goals to hit, and a lot of times, they did, but regardless of performance, their fee was just 10% of whatever we spent with them.
As our spending started to increase, so did the fees. At $100k in media spend and $10k in fees, having an agency team (3-4 people) that were overseeing our account was worth it. As we got to $800k in media spend and $80k in monthly fees, it didn’t make sense for a few reasons.
I want to preface this by saying that agencies are 100% worth using at the right time and place. At Sharma Brands, we tell clients that we like to work with them for 6-8 months and then graduate them. A part of that off-boarding process, many times, includes helping recruit new talent to be in-house. There’s no doubt that working with an agency will help build your brand, but for most people who are within the range of $10M to $500M in annual revenue, you should aspire to be in-house for your always-on marketing channels.
Here is why I think paid media should be brought in-house:
No one is FULLY dedicated to your account. If you work with an agency where they don’t cap the number of clients they bring on, then you’re essentially one of many to-dos’s on their plate. The problem with this setup, especially in lower-funnel media, is that you need someone who’s refreshing the ad account and testing new things on a constant basis.
The economics don’t make sense. I’m always fighting for founders with this email, so as much as my agency friends will hate this, it’s true. I remember approving agency invoices for $100k while spending $1M in media and thinking, “What are we doing paying $1.2M a year when we can build our own team in-house for half the cost?” After a certain point, it makes a lot more fiscal sense to bring these needs in-house. If you’re digital-only, you’ll need 2 media buyers (social + search), a strategist/director, and a coordinator. The argument that the agency sees multiple businesses and can apply shared learnings is usually false, too. How many times has an agency come to you and said “We’re seeing this work really well with another brand, and we’d love to test it with you!” Probably once? Maybe never?
You don’t own your learnings. One downside to having your digital advertising fully outsourced is that you don’t own any of the learnings when they’re gone. You don’t know why certain optimizations were made, why a specific audience was switched from Cost Cap to Bid Cap, or what worked when Taboola was tested and worked or failed. This is the main reason we don’t do any media buying for our Sharma Brands clients… we want you to have the learnings, not leave when we’re done in 8 months.
They’re not producing creative, landing pages, etc. Media buying is slowly becoming a commodity, and tons of agencies said the same thing this past weekend, too! So, what makes digital ad spend more or less effective? It’s everything around it — the software stack, the Northbeam attribution, the HOOX landing pages, the ad creative, the top of funnel marketing, the website conversion optimization, etc. So, remind me again why you’re paying 10% on top of your customer acquisition cost for something that’s already scaling?
You can do a hybrid approach. You also don’t need to go all agency or all in-house — do a hybrid! At Hint, as we transitioned in-house, we worked with Kevin Simonson’s agency, Metric Digital (acquired by Wpromote), to support media buying as we brought the team fully in-house. I later learned this was something Metric Digital does to help a lot of DTC brands. Lots of brands will also have digital ad spend in house, and then keep things will less scale outsourced, like TikTok, out of home, podcast, influencer, etc. Another approach is to also have an in-house team with MentorPass credits, where full marketing teams can just learn from other industry experts.
Generally, you don’t need to be all or nothing. But at the end of the day, with paid media, it makes sense to bring it in-house as you scale past $1M in spend. If you’re spending $10M+ a month, then you might go back to a larger agency for extra hands at a fraction of the cost.
If you’re curious about email, creative, influencer, and web development agencies — whether to bring them in-house or leave them external — let me know! Maybe I’ll send another surprise email during the week.
But for now, on to some fun stuff…
Vendor of the Week:
Parker — The eCommerce credit card that actually cares about cash flow.
At GeekOut, Ronak Shah, the CEO of Obvi (bootstrapped & has done $30M in revenue in 36 months), shared his finance tricks. It was a combination of Plastiq (paying ACH by card), negotiating better payment terms with Facebook and other vendors, and using a credit card called Parker.
To pay Facebook ads off, he can use ACH billing, which gives Ronak net-30, and then he can use his Parker card to pay that ACH via Plastiq, and extend his Facebook terms to net-90.
The best part? Parker has ZERO fees, and ZERO interest. You get a credit card that is almost instantly approved with 10-30x the credit limit you’d normally have, and net-60 on ANY purchase made.
Parker has a special deal for this newsletter and you can take advantage of it by setting up a demo with this Calendly link.
- $500 bonus just to sign up
- 3% cashback on all ad spend up to $300k ($9k back)
- 60-day payback, interest-free, on ANY transaction
Essentially, you can get $9,500 in cashback rewards over the next 30 days, without doing anything different than you’re already doing. It’s a no-brainer.
Click here to book your demo with Zach and Martin at Parker — they’ll take care of you!
Jobs of the Week:
- HOOX — Jr. UX Designer
- 1180 — Client Lead
- Une Femme Wines — Growth Lead
You can find more open roles at one of my companies or other brands on my jobs board!
Question of the Week:
In 2 sentences or less, what do you think of Elon Musk buying Twitter?
The winning answer will get a MadHappy gift card directly sent to their email!
Brand of the Week:
Turveda — If wellness shots and probiotic sodas had a baby
This is a new brand out of Los Angeles started by a father & son duo. They described it as if a wellness shot and a soda had a baby. Why not take the benefits of wellness shots and add them to the same sodas that everyone loves drinking!
They’re quite early as you can tell from their website, but I’m excited to watch the brand grow, especially because the father/doctor is a legitimate gut health doctor who actively practices. Check them out here!
That’s all for today!
I hope I didn’t offend any paid media agency owners with today’s email — it’s all love! Hopefully, you found some time to unwind this weekend. If not, use these last few hours to go for a walk tonight!
I hope you have an incredible upcoming week and you get 9 hours of sleep tonight. Have a safe, healthy, stimulating, and exciting week!!